501(c)(6): This Should Prove Interesting....

Most people are familiar with Section 501(c) of the tax law, which lists a number of kinds of organizations that are exempt from income tax.  Most recognized charities are exempt under Section 501(c)(3), and of course social welfare organizations - the subject of the IRS "scandal" involving conservative political groups - are exempt under Section 501(c)(4).  Less well known is the exemption under Section 501(c)(6), which covers:

(6) Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

This is the provision which results in the National Football League being exempt from federal income tax.  However, it's reach is far beyond the NFL.

Yesterday, Jason Chaffetz and Elijah Cummings, the chairman and ranking member of the House Oversight Committee, sent out letters to a number of sports organizations regarding their 501(c)(6) exemptions, including the National Football League, the National Hockey Leagem the US Tennis Association, the Women Tennis Association (WTA) Tour, the Association of Tennis Professionals (ATP) Tour, the National Lacrosse League, the PGA, the PGA Tour, the LPGA and the Professional Rodeo Cowboy's Association.  They specifically asked for "an analysis of what your organization's 2014 tax liability would be, if your organization were not exempt under 501(c)(6)."

I can't wait to see their answers.

A link to the letter to the NFL is here.

BTW, the NBA, Major League Baseball and Major League Soccer are not tax exempt organizations.

For more on the 501(c)(6) exemption, see this.